Boeing (NYSE:BA) stock remains in freefall this month as the company faces numerous headwinds, including the Chinese orders that were announced in May this year. It slumped to $198 on Friday, reaching its lowest level since March this year and 22% below the year-to-date high.
Trump-Xi Summit May Boost Boeing Shares
Boeing has faced numerous challenges this year. Last week, the stock retreated amid concerns about its 777X jet and whether a GE engine issue will delay its entry into service.
In a statement, Kelly Ortberg, the CEO, warned that the delay may push its certification into next year. He also added that a wing issue may slow its efforts to increase the pace of MAX production rate.
At the same time, its acquisition of Spirit AeroSystems has led to substantial challenges and losses.
This week, focus will be on the upcoming meeting between Xi Jinping and Donald Trump in Washington. The two leaders will likely discuss more about China’s purchases of Boeing jets.
Chinese airlines reached a deal to buy 200 jets in May, the first order in a decade. This order was much lower than the 500 that analysts were expecting. In July, however, reports emerged of differences between the US and China that put the deal at risk.
The main issue is with engine parts and supply. Beijing has pushed for guarantees on long-term supply of engine parts and services, while the White House has maintained that the post-sale maintenance was not part of the deal. Ironing out the issues and possibly new deals would be bullish for Boeing shares.
The new orders would come as the company continues receiving orders from the government and companies. It is in talks with NASA for 10 more missions with Starliner, and also received a $112 million Saudi Arabia contract for F-15 training upgrade.
Boeing also received orders for 20 737 MAX planes from Lufthansa, while Korean placed an order for 103 new jets. These orders will help it to bridge the backlog gap with Airbus.
Boeing’s Revenue Growth Expected to Continue
The most recent results showed that Boeing’s revenue grew by 8% in the second quarter to $24.5 billion. Its first-half revenue rose by 11% to $46 billion, helped by higher deliveries and higher prices.
Analysts expect that its revenue growth will continue in the foreseeable future. The average estimate among analysts is that its annual revenue will jump by about 10% this year to $98 billion, followed by $112 billion next year.
Most importantly, there is a possibility that its earnings per share will turn positive next year. If this happens, it is expected to make $4.09 a share next year.
Benzinga data shows that most analysts tracking the company have a bullish rating, with the average target being $274, higher than the current $198.
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